How to maintain ethics as an accountant when times are tough
IFA fellow Faisal Sheikh sets a timely reminder about your ethical code, and how it will be tested during the toughest of times.
Society has bestowed upon professional accountants the sole rights to undertake speciﬁc services (eg. preparing and signing oﬀ ﬁnancial statements) and rightly expects something in return. Thus, accountants have a signiﬁcant duty to maintain the public interest above and beyond their own personal interests.
During their work accountants may face tension as they try to balance the conﬂicting demands between their commercial interests and their duty to uphold the public good.
This tension will exacerbate during the current COVID-19 pandemic, which has severely disrupted global commerce. COVID-19 will result in ethical dilemmas for accountants including pressure to engage in creative accounting to minimise tax liabilities, ignore money laundering, ignore proﬁteering and making fraudulent claims from various government schemes, such as business rate holidays and assistance with employee payroll, to help businesses.
So, what is an IFA member/student or professional accountant supposed to do?
According to the IFA Code of Ethics (2020:16:110.1 A1) an IFA member/ student must adhere to the following fundamental principles:
- Professional Competence and Due Care
- Conﬁdentiality, and
- Professional Behaviour.
In addition, the IFA Code establishes a useful conceptual framework that requires a professional accountant to ‘identify, evaluate and address threats to compliance with the fundamental principles’ (2020:21:120.2) that has been called the ‘IFA Ethical Triangle’ (Sheikh, 2020).
Adopting a principles-based approach to ethical dilemmas means accountants cannot depend upon detailed rules, since it is impossible for rules to address the complexity of the real world.
Thus, ethical issues are generally formulated in the form of higher-order principles, which oﬀ er ﬂexibility to deal with new and diﬀerent situations as they arise, such as the COVID-19 pandemic.
Fellow practising accountants will be forced to exercise and take responsibility for their own personal judgements. Indeed, this will be a tough call given the exceptional circumstances and potential loss of business or clients.
The IFA Code of Ethics (2020:33: R210.5) oﬀers the following steps to the identiﬁcation of ethical conﬂict:
- The nature of the relevant interests and relationships between parties involved; and
- The activity and its implication for relevant parties
The above replaces the checklist approach of the 2015 Code of Ethics, which now oﬀers ﬂexibility to deal with new and diﬀerent situations as they arise, such as the Covid-19 pandemic.
In the end one can consider the following advice from Socrates that will help accountants maintain high ethical standards even when times are tough: ‘Regard your good name as the richest jewel you can possibly be possessed of – for credit is like ﬁre; when once you have kindled it you may easily preserve it, but if you once extinguish it, you will ﬁnd it an arduous task to rekindle it again. The way to gain a good reputation is to endeavour to be what you desire to appear.’
Faisal Sheikh is an IFA fellow and accounting and business lecturer at Salford Business School